Tecogen (TGEN) 13 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Benjamin Locke	Chief Executive Officer
Abinand Rangesh	Chief Financial Officer
Jack Whiting	General Counsel and Secretary
Sameer Joshi	H.C. Wainwright & Co, LLC
Alex Blanton	Clear Harbor Asset Management
Graham Mattison	Water Tower Research
Michael Zuk -

Call transcript

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Operator

Greetings, and welcome to the Tecogen Second Quarter 2022 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. With us today are Benjamin Locke, CEO; Abinand Rangesh, CFO and Treasurer; and Jack Whiting, General Counsel and Secretary. I'll now hand it over to Jack Whiting to begin. Please go ahead. muted, ahead. be may you please go Sir,

Jack Whiting

XX-K in section Good Secretary harbor call XXXX. of important the Act is those forward-looking weeks. provision Jack The the Litigation is Reform for regarding direct the and by results those result at Actual Counsel Securities of under report XXXX and SEC and discussed in and Factors, earnings heading various factors, website Whiting, General earnings may harbor the Investors on Tecogen. our for plans archived website. on second the Investors the expectations, recorded presentation the on section with press the the constitute Form presentation. safe safe and forward-looking Private of caption file the will prospects morning. provided XX-Q our two which and release website differ make tecogen.com our company's this This like press being morning your reports to be Various are annual statement as a we SEC of under are these to our statements Please included indicated including materially may Risk available most statements on from Form the under filings. quarter purposes release also of company's on available note this section and in our that of Investors attention recent in I'd remarks future quarterly about

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

the the and Investors provided I'll website. accepted refer section quarter this to over our now the to measures XXXX generally non-GAAP release call directly prepared of we turn GAAP. in call, to press second will comparable in principles financial or GAAP Locke. measures Reconciliation relating the accordance our in is measures these most with earnings certain accounting of Benjamin not During to financial

Benjamin Locke

Jack. Thank you,

indicates, XXXX As a of quarter overview, we'll start Slide review followed the our agenda a by company results. second detailed on brief X with

key then will and operator to earnings the questions. discuss call takeaways turn from We the the for over

As reminder, in on for will page of Presentations our investor presentation a website. this be download available our the section

customers gas X. that energy and Turning like sells efficient footprint. to overview emissions a Tecogen's and and maintains to I'd provide provide a short systems of core cleaner for greenhouse businesses. while clean reducing savings to environmental resiliency Slide energy Tecogen

Our solutions of help has industries through their XX and have resiliency a to systems, grid Tecogen and thousands for environmental operations provide centers to maintenance and reduction, service goals revenue long-term carbon providing cogeneration also services these our we outages. facilities systems. steady Tecogen recurring reach chiller for stream while deployed and

Slide of our systems Many operation grid maintain here, to with left ability microgrids, a during to Turning as operate shown X. the as outage. on the distributed generation

rates electric burdened, peak becomes provides resiliency outages. grid and congested and microgrid this relief increasingly feature the costly, As to from

In addition and chillers. lower industrial-scale Tecogen generation reduced to a with offers gas traditional compared our systems, chillers distributed to footprint operating greenhouse costs

to These with environment particular operations use maintain controlled our power amount cooling indoor products tremendous in clean of growth success a precise We had for agriculture. use have grow conditions.

is amount a solution while recognized dehumidification. our emission simultaneously the whether the and clean systems. reinforces all and on footprint require comes sizes. of environmental and further operate heat engine emissions of emissions a the capacity and as NOX technology products, our the on on electric the of our And for facility, not Our them hydrocarbon chillers facility; across cost-effective right, platforms needed wide Ultera providing reducing substantially regulations COX, of for to heating reduce finally, Ultera local range or standard The

revenues Our tons about controlled more XXX,XXX units we our date. increase hours substantially relevant dioxide over by systems X.X properly environment agriculture shipped, clean services. numbers than as it million and where over X deployed in exhaust we've to X,XXX provides continuous COX controlled from is our than kilowatt relevant clean from can while With the more XX reflected These continue which stream of some run maintenance to of injection energy emissions of increase systems, becomes facts of crop to million hours carbon relates clean growth emissions energy generating as electricity yield. time. our Slide operations reduced more deploy

our the revenue a of main streams Abinand call I like shown I'd numbers, turn over second for to to X. Slide our on three of Before quarter investors detailed review remind

product Our sales systems of of consists of cogeneration and chillers microgrid a range customers. markets to revenue units, and

with service services maintenance consists Our primarily our installation revenue small operations services. of a and of contracted component

and then electricity our Our produced the Abinand and additional facilities. that, expectations have revenue including by for like about to sales, is customer energy at on-site over in comments numbers the detail, thermal energy comments will our I'd to more for rest production the on turn stream review XXXX. equipment call takeaways I our sales With energy Abinand? and of of some quarter to from the

Abinand Rangesh

payroll product QX. in cost XX% hasn't We higher been margin the impacted from to mostly instituted to period increase increased revenue to increase was was chain revenue The due In associated in million Thank costs detail and to favorably some XX%, by $XXX,XXX chiller Therefore the in fees the operating $XXX,XXX in increases the compared during with miscellaneous were in cogeneration $XXX,XXX later by the increased the expenses made due income Gross particular, due negatively of in $XXX,XXX revenue collections meant were end. expenses in QX I in share was in EBITDA January, compared the was R&D expenses. compared EBITDA. or QX loss compared discuss $X.X Net same $X.X supply million. the G&A 'XX, receivables per in delays previous to year. was to EBITDA $X.XX EBITDA of legal net development and quarter employee million decreased chiller. the orders related other retention XXXX. loss higher ship segment G&A and was QX The adjusted expenses the due that to net some income retention QX XX%. in credit. to loss two Operational was reflected the revenue unable to revenue. This of more a 'XX in we and by will were slide. shipped you, that was the X.X% increased was the Ben. XXXX. higher The units $X.X price materials. an which XXXX was loss of XX% to air-cooled increase credit. impacted expenses. at R&D increased due was due $XXX,XXX $XXX,XXX $XXX,XXX. higher XX.X% income QX by and EBITDA higher 'XX was revenue to employee QX adjusted at to to Products $XXX,XXX.

product to costs. declined to activities. increased to decreased Our due material 'XX, XX% QX compared QX to 'XX due in installation the from primarily X% Service revenue XX% margin decreased

X% decreased issues. contracts Our 'XX chain to compared to due supply service QX

Energy some Energy from the I constant seasonality since decreased to to back about permanent increased QX by of 'XX. margin now reduction quarter-to-quarter. however, at primarily production Ben sites due this X%, production to earnings takeaways. call closures was XX% XX%. XX% will margin, remained service and Our to talk hand the

Benjamin Locke

Thanks, Abinand.

important from Turning are feel the quarter. XX. I'll the Slide to takeaways discuss what I

as on the see sales glad XXXX. product consistent And focus our up to with are chiller second was cooling. which First, by the increased we this to continue pointed driven increased XX% sales, Abinand out, from clean quarter of is rebound,

significantly impacted margins. our costs higher However,

seem rounds we the our increases products. with many our margin quarters. components goal inflationary is instituted said, of to of our for components in offset of adjustments Abinand to be to Prices price and cost get back stabilizing, on product par previous of our systems As the

markets sales making agriculture to for in progress here, cogeneration with multiunit and residential chillers. particularly in for continue our environment core shown expect controlled We facilities

by is our demand federal school funds, Inflation systems Reduction systems seeing access good It the Act will the also both where from continued economics resiliency our for sales. product XX% tax the which passed worth the and that are increase improve chiller cogeneration We improve systems to efficiency. our also XX%, recently credit and investment Senate and of infrastructure and support will energy our for to mentioning systems

to Moving service. on

revenues We had not service were activity to expect activity compared overall any in construction XXXX mostly quarter currently have the no Our do -- QX of some year. XXXX, do second installation of lingering not planned. due and last down construction to

We contractors. revenues to contract the to service high-margin engineered to accessories quarter-over-quarter did we our easy dip sell service to add load small and of installation of a to but due segment delays, products part continue increase maintenance modules part our expect by as steadily we We as more help facilitate shortages contracts. see for quarter continue in product and

to continue make our business. overall improvements to we Lastly,

by have industry-wide relationships and cost alternative We chain increases when and finding the delays prices manufacturing responded necessary. vendor to raising supply

confident of products experienced industry-wide for be behind lining are shipment majority Still competitive disrupted. the and been our us disruptions to supply are we're that deadlines chain is backlog. still the meet to We issues able that similarly these have will we that

these products disruptions, to products. are be to we actively our competitive engage more to about proceed. in able hope discussions as they of to these talk these discussions Given some I sell

Turning XX. to Slide

focused We stay last we to that year. pathway to continue on growth shared

resiliency, in market the where requirements. best solutions facility's and savings one are existing can't of chiller particularly for grid indoor meet the sales seeing electric energy when the increased the growing are We we power

which where a showcase our AHR North our we developing which track substantially in hybrid HVAC Next XXXX is we the largest agriculture drive markets, is trade particularly fill potential in will gap chiller many in in hybrid of expand drive next-generation shows Expo, The expect air-cooled chiller, offering. environment are controlled Tecochill in on February sales air-cooled to needed, our still the the America. and at one an model will

for a for see and efficient our clean to microgrids. a opportunity continue also We as foundation technology promising

systems, that solution our shown for facilities grid an requiring our have is effective microgrid clean combination reliable resilient of We power. a cooling affordable with cost-effective systems and combined

continue grid electric supply to constraints as to overloaded increased expect burdened electricity demand. due We and nation's aging becomes grid the further

July in controlled a mentioned we are business agriculture. new our as focused release, unit on Finally, environment establishing press

projected to and on issues population given in grow noted production, farming intensive growth release, environment the is impact substantially. we for in food controlled climate of the techniques As need the expected

CEA As address have a participants numerous facilities. interactions market, provide to industry that result the Tecogen will energy-intensive CEA services and these with believe of requirements equipment we our opportunities in of additional

market CEA play update discussion more for hope have We and investors operating CEA the that are this participants in to with on in the as and developing, maintaining can roles later progresses. additional our focusing Tecogen also year facilities

showing to conclusion, continue in goals questions. providing and over over the to I'd that, updates to it I operator next So look for hope With to forward against results the turn like months. these few

Operator

comes Thank Instructions] Sameer you. with Our your Please question [Operator state from H.C. first question. Joshi Wainwright.

Benjamin Locke

Good morning.

Sameer Joshi

Good Good How morning. Abinand. you morning, guys. are

Benjamin Locke

We you. are doing Thank well.

Sameer Joshi

been about has now Are focused unit are a So that here CEA additional that would new first with existing is added formed it unit question, of resources? for being the been just the that sort business resources initiative. or there have

Benjamin Locke

Yes, not time. other currently bits some than of

at we've we Abinand Board committee look established is stated this, part As of. a of previously, which had to

a looking this. just want from engage time, mostly exactly bit in the how Abinand to So little board signed we aside at

Abinand Rangesh

that I value in just lot areas some chillers, believe that add we're these help given capital-intensive impact it's already And have we -- selling lower have as the we working you've that to that And lot the mean, the with. now way of CEA I seen, already of growing, providers here environment, very best a way can operational are through benefits. just the as Right have areas things these long-term Exactly. space. with for costs. we've a but a mean, can can CEA to done of there's is where it's we

lot seen there, have So cannabis both different here. facilities some we're and of bunch working non-cannabis over in a we partners, a of and so we've with expertise

release going later doing the in-depth to more in make how approach to this there on hope exactly we're and what we're we So year. in

Sameer Joshi

Yes.

that noticed talk Can So be one that COX from you things the CEA systems your you also bit? of can you're environment dioxide is in the emit that the may working used that a about on I itself. little carbon reuse

Abinand Rangesh

Sure.

of I mean, substantially you crops growth of the actually can as use be know, plants, of the boosted So rate with COX.

the you You have you area exhaust because the for are long engine testing this this that can that chemicals something you're to it's crop. that our looking requirements. be limits aren't can very because clean. -- so of have from And you present of exhaust allowed engine But OSHA and in as from is to bit the basically engine more concentration going certain there's side. on have done very, that is a certain use things have, that little typically you various as exhaust amount But quality the this is before at. that we're make an that There sure affect they the

limited by are basically you So anyway. that

So rate of providers essentially to same thing. boost by significantly they now, it cylinders either the crop various the and can injecting or buy do through you inject COX, COX burner use pipes production to a gas right

they're generated order facility this. by the being do grow COX So that's to And spending resources additional plants. it's in to

especially that amount to this from overall carbon hope lot. facility, will footprint engine able something a we significant be the you this and footprint that the the day do matters This is where age of So the able and exhaust for in of if were benefit various reduce to carbon facilities. a we're

Sameer Joshi

it. Got

square benefit XX% this Just course, of your being or CEA topic, because think probably the will question on CEAs? any sticking steps the or size that meaning, a around XX% But that of topic unit, XX,XXX And is part what more. focus feet is on first other there business I the this two that two are you achieve then that Is to part step, rather size systems the to the are market initiatives. of share. but intend gain taken, creating penetration,

Abinand Rangesh

a question. great That's

little foot, at versus was to that crops. tied square XX,XXX a cannabis when space cannabis the the really, with thing CEA of it's more first different the you because So look food

need usually, what we're of So XXX cooling. finding is, you somewhere around tons

cannabis or or, would FDX our transpiration. space that, chillers the of our canopy XX,XXX of for reason one releasing especially that greater. plants foot say, of square be The because single chillers water is So in for cooled [ph] two that's are air vapor, a

space. you need molds, to you to humidity So that need temperature need environment, of also dehumidify and the you keep both the to in avoid combination control

very also I add lights tends the grow So it's this. to result. cannabis energy just be very, not that dehumidification. as intensive just mean a It's

more of in is even Massachusetts, found we we market had early an in the than and the now able what on facilities get that share selling So advantage we actually right that XX% terms to cannabis bit space, where chillers were installed. a to of are

legalizing. all other to for for hope facilities. In other larger states, that we our equipment, a look legalizing So the like that Jersey facilities some are are there are basically too larger the at states New York, little small and New states fit a but are rail

this we're work work So on And one. is lot lot of a them we design with with way the the phases. already engineers, of the key to with this day the a is established a from working of to we've in with because tend lot ourselves what space engineers doing

operational, our chillers. do already comes is they're facility and specified the it anything? want to Ben add you goes actually when So designed around

Sameer Joshi

Got it.

Benjamin Locke

site I that's get mentioned they're bidding the design get important, down the part ownership and down chillers understanding in through and trade such our work contractors way that's add interactions those the cetera. is And able guess expertise for would dots the last to consulting down cetera. about shows, the as be Abinand cannabis, going greens, connected to and to model, a we tremendously that all that the our saying one that build thing everything is right. the Abinand from et Yes. relationships to is as the that not doing engineer, all engineer, CEA I people And virtue to is No, that for model a how of I I'm as other important. similar is leafy by et have, as facilities but is was particular that a to saying, think hugely and model be

of using that specified folks back It's our getting this understood. our So getting through equipment know are answer network and involved and that. to achieve how we're to the in that we going

Sameer Joshi

Great it. helpful. that Got Thanks for color.

Moving to -- yes, go ahead.

Abinand Rangesh

Yes.

non-cannabis much. higher that of see we're reasons are add to to being to wanted able and really they things the, type it typically that you're I one if But able one that's doesn't just moving happened thing where of is facility. the I past, the that have be really don't grow of food a need or starting control greenhouse the is controlled the you're from to Sorry, recently facilities environment, where to sold further until distinction in crop quite although on lot a that's cannabis But space, the the one like in to has targeting. as that the see of environment the of we're -- cooling non-cannabis starting same the we the value more starting to that facility what of food that's mean level control environments constructed is facility various country, more you're parts now crop what the there's and anything

Sameer Joshi

we No, Yes. Yes. agree.

phenomena cannabis seeing on in of so. I did you -- are just moving more but the the the results, But food being say to environment actual more XQ grown think same to top reason I two misheard, the maybe not have We controlled and but to shipped. ship How added would why couldn't those that were cogen line? in much you the was that a ship And specific units revenue couldn't the be them? commentary ready and there

Benjamin Locke

don't exact tell revenue. I of want amount the you Well, Yes. to

but somewhat be delays. arbitrary time vendor, some I wasn't that it's maybe case, for sheet to die a about And As we it hard. this equipment in think habits you reasons of I that. pricing was a and And very the add this ago, would know, arbitrary year think have as us good sensitive it component it or do I'm our and old always metal for

of as that. into in two goes as as couldn't we so I And not to I'll things. later. went, even is, again, it and guess it simple going it was [ph] check when if make have And And price to just it makes -- Trane the to weeks be And chiller, right? things for pricing. trying always such are, are our will terms we timing -- these off And and a hearing that ahead it, I'm just of XX tell predict we're So maintain lead hard something, chillers just keep weeks don't of to more put chain they later you, thing increases that's customers satisfying probably And supply about ready but a need week it things drive available, McQuay them. almost. because advantageous electric competitive and [ph] chillers, times basic perspective

So -- industry-wide trying kind we even we're supply of in find our we're stay are it. comments, have to in alluded as actually of to front of silver the struggles, and and the I my issues chain though it linings

you've wow, say, could got now? a you great. it in chiller can right somebody That's And stock, ship

so ship particular and yes, why time. those So that's on units, didn't they

Sameer Joshi

So have shipped they in.

So [indiscernible] okay.

Benjamin Locke

and exactly. I the think, was It in four believe. six I They've gone off others. joined Yes, total,

Sameer Joshi

one it. the just of margin, quarter price But you of one, we the in end do increases then gross in a near by expect results. full the gross was lot the should see I increases to by around year? see think there expect last the And and previous margins product Got Understood. the price impact to XX% commentary of when the

Benjamin Locke

to there's over mix quarters, and I -- so. of better things couple were hoping We're post. see going next that you're pre-price always a increase the usually, some mean, of

margins relying ourselves So price not if on to the of thing kind to to get point. we're earlier other is alone product. expecting our we're increases of just back to And that get

increase. they that alternate on manufacture product. are The things things we're to site. your how some the time to the often are reengineering to working We're components we it's If one intervals our service change a right, on. way using a because service well side that service you be other margins that, components things, to And cheaper and basically -- get as that we vendors increase technician just areas can various not the between of also could service like of through with what working do is are you that when key on definitely has

So increase of back were. range to where margins up we're things a to working the different various across they

the back So end I'm that hoping be up the year we'll there. of by

Sameer Joshi

air February. on Great. May I air question the launched that chiller is chiller in is cool ask one more again, being that being,

Benjamin Locke

Yes. Yes, sure.

Sameer Joshi

needing -- for Is or better launch all it system way the to months time? is ready it the to make and of a a will HR there yes, just and expedite be at big there showcase maybe to tweak these you

Benjamin Locke

vendors it's us the off can the a specific deliver our really What answer be they decide on important to these it money as decide they the year try if can't one Sure. has as just Board it from we components the we a we now. to go what me upon because and make imagine, quickly vendors no. you a their something together that with not fear question, they're going repeatedly. and early vendors these to relying if is and An going if that on decided asked can. just us. of It's We're to sell great thing doing cobble of cobble And to what lot away something as existing -- is and were going together this is that, to

about with get items do alternative to an be course, of with on said, added to But in to of we did on still way and going those going it to But to farm of the these market. of the develop that it of not again, We're suppliers, for that do out so we run, proper any right an went not certainly is couldn't a control we're it the little beholden track which to our that to for. bit design what we're suppliers of and concerns manufacturing, it. mind, everything. find full or time, over because to that manufacture all approach more kind to ourselves that's And long in and have do ourselves

customers. Atlanta or crook together that to it's [ph] is, building We're going might it I of for with is going sometimes mentioned turned have from so we're And after ready. goal this And when we hook where we before, it would think have a those get to by later that's that it prospect sales year. runway is ready we and be as away because Again, with out the doing is can but what think come talking expect in that I when AHR, February. whole the AHR we're it's rolodex earnest. the by we this that is keep satisfy, is thing equipment don't this I Avanade We of start selling in them

So that's the kind of update.

Abinand Rangesh

took Yes. regarding New critical things little thing the chillers because the choices that size City some And these made we rules design that compressors certain were the York chiller done. also design of be particularly with choices and but other can that has air-cooled felt longer, we strange a and

New into So sell City because department chillers that actually fire the of codes. there's a vendors can few York only

be chiller of So meet as a result designed those the that, those of actually requirements. we to one could that vendors

to get and publicity And places from also of customers. did that So tends why of part to of a markets. work one also selling in thing because key lot AHR of this took. in-house reason And be lot the it where one are of our it part chillers we wanted of introduced, the that's a was what potential capable of is we the biggest

forum the launch really product So good it's on. a to

Sameer Joshi

that color luck. a lot and Thank you. good Thanks Great. for

Benjamin Locke

you, Thank right. All Sameer.

Operator

you. Thank

with Graham from comes Tower Please question next question. Water Mattison state Research. Our your

Benjamin Locke

Graham. morning, Good

Graham Mattison

good Good morning Hi, morning. guys.

existing segment. than on follow-up And the a the you're those the selling those What's Just your typical any on products? some this is turnaround sales or it time or CEA cycle different what's of markets? as

Benjamin Locke

sales say because and just it things. think more is when they're doing to in little They about bit to about predictive this muck perhaps cycle they and want bit over-think these a do It’s would facility -- things. cogen in don't a I they're -- going build earnest the than fact, simply

drawings. as and the or goes. get owner They some consulting the all with them they rings bidders. with bring to in the five upon, different pricing. it with get give we our its ultimately bid there the or bid, makes saying, -- it drawings the phone four to the were with you So -- architect, way our take We on engineer The

the regard. get has its an is little owner that But one like So them selling them, wait their I've I quite once course, mean it's these like predictive could their that chillers in just -- everything lined a well. And would again, I funding, ready, things up. few say I even we longer to okay, a plan things table quicker. of quick. if for process. months. as has the seen them funding there well, it go be it's around all Once but turnaround funding, to waiting of where go that are established, ready is I've his get seen they're because then is to go, that's it's a more predictive

Graham Mattison

thank compare outages and just bidding seeing prices? power we've a How overall issues to, it. electricity with the say, does you. demand or some then ago, of And headline Got environment been it out Great, on there. year the question higher a given

Benjamin Locke

gas help. there Yes, And of ultimately the is. yes, higher prices course,

You say, But us. of electrical we're natural more without is well, do. saving all-natural Ben to And Yes, we you natural you you use gas, gas gas. course, would use generation having than have

or in few might our because there, chillers of tax to grid the is right contemplate at you this in it's I'm million, real and again, I advantage especially in XX% are the done. they of and commensurately Act, incentives. York the to the get And that articulate compelling. billing, our are be entities got And mentioned, the be past Inflation will lot it's take high. ITC, pretty done, that be about liabilities England and it go If any ISO $X.X you once And time, saw if to really weeks, costs completely that of and it makes right? think it. sold can mostly take I part high you're done, it just a off but once to signed, can chiller, million folks. able mix you -- completely a see tax you'll building multiunit and the you indeed back use that fossil might that are it a And into economic point chillers to going you've in even New chiller and days be as for to generation. you without residential it's your around case, And it's circle And of equity, come the the wherever We'll plant I New Reduction on to just on $X.X draw sense

pretty it I'm you're out. the of context the that hopeful is, as rolls mechanical heat children you, to Energy it do that at as qualify in defined Graham, doing CHP or Department chillers CHP. to as for our dehumidification long it recovery just put whatever from as CHP. So in Again, it's for It's

systems, are So just like to qualify typical chillers microgrid as cogeneration of this electrical our for well.

Graham Mattison

hotels previously, were you Great, some industries seeing Are in And seeing those question things were COVID, hit that as last industries? any year, like you by there and mentioned thank recovery on you. such like last Are demand. you that.

Abinand Rangesh

of back things realizing didn't a There a some a hotel. because as capital pretty think about -- industries. the a that definitely I might the these when with of was be you so, of a of They're right, we're could XX% projects in we they the mean entities. seeing have that mean ITC, mean I last this I we look -- make solar they those certainly when lot COVID, particular to solar that do really mentioned investments. at quarter years, large X one Yes. or in solar announced project year, industry, are big something lot Ben because implementation type for ITC a I profit really driver the drove few look the had the you of here. And ITC. hotels

two, part future. to the now CHP investors mechanisms them make the One, investors it had tax it of it and of allows didn't always things. But it CHP allows ITC, number as was allow this does ITC, only a use use affordable. this XX% two a financing to with had One to problems really to different that And see equity. very XX%

Graham Mattison

for really can queue. right, game Thank jump I’ll thing you ITC back you The so a much. guys. All be Yes. changer in

Benjamin Locke

Sure. Thanks, Graham.

Operator

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

Benjamin Locke

good Hi, Alex. morning

Alex Blanton

news ITC. any good yet? based Have that's on had Well, that the morning. you on Good inquiries

Benjamin Locke

to it, it. their detailed as yet, trying bajillion it. pretty it main that give It's to I think understand pages the get We've little our a kind Alex. pretty team to updates which And that job sales course, that weeks then as pouring And couple to of still to other they is is there's I is I'm I'll more all communicate at do customers. groups get puts few that I'll all that summary industry a of and give assumption of that marketing look still We're elements and we'll, next and of thing and it press. -- mailers over in read off the then proposals get of XX,XXX in jumping and days preliminary will through the fresh out Not my as Intel, in ITC be don't factual folks of a it to whoever summary after our and good a clear everything. XX% I part all industry white. of fact, and a the an GSA, to giving that it. got black to And is But

Alex. soon, I coming So think,

Alex Blanton

industry. the So way this hearing? stimulating I'm that in what Is hotel of a is demand

Abinand Rangesh

across projects the and partners that of provide the one lot board, generation. for-profit ones of of things is forms -- the is any any advantage credit. these in have really tax actually can also really any pushing yes, we a financing that for It's other of this of will again, because Eventually, be entity this Alex. that used It take they're,

center so isn't just happens for it. hotel. before be And just to It this the

Benjamin Locke

do it equity the as to down no, realizing take going tax ESCOs piece market if or attack. Yes. and chart, almost schools these I school as you of and that they're them look you you in go schools And be ESCOs in that said, through energy was at fact, these one Abinand the municipalities at over right? and think well, all because and look that's schools will and and come then sharp on our and fact, segment say, don't apply, But all whatever page

if there segments, of here the think just So all part, an small our and by say, liability, at I YMCA impact look overall be a there's market tax a have to you Maybe going our here. most that I doesn't markets. but would

Abinand Rangesh

it some the that to The in future. other quite are It to part that in lot it ones wasn't perception that our changes one rebates whether of that that one thing, common of the is used money for be is it's technologies be a past, of look, rate, will is or it's natural say allows and than the CHP the government big this other the quite out -- far it more state the customer just customers sanctioned product was because does is is not, just, is of the -- I shown was it this Yes. it's take the projects. fact that was of front doing. us this especially the to part something by efficient it here thing say, government owners can should when customer, gas technologies the the this or of a there. the the not position by getting customer And this the tax things also just the was that was large were essentially say that going also is fact you property was that

Benjamin Locke

it legitimizes an as It future, CHP as energy what far It's does. hugely important.

Alex Blanton

started you your now footprint. that off reduces beginning at the Well, equipment the saying carbon

you relate XXXX. goal footprint the that the not away. we how legislation is just in answer the the reduce know mean to carbon I very of that then new here, think far but the by I country that and that's clarify I would -- of year by XX% reduction please much the climate this

a and the about reason but… address And putting reduce you in be hotels all can be That's for seems will a these that. actually what by long that brought carbon equipment to that? be do requirement legal a extent can go this to there footprint. to but So legislation, Can schools and down, so on question, to

Abinand Rangesh

bit taking maybe now is COX try. so more efficient. the of And this recovering because been fact the you're net a you're or used heat. why I in have of And will all grid because or basically -- the reduction a nuanced simple answer any chillers -- just would is CHP power, had that reason a little it's XX% of result power, which you of them

system turn simple into that's was very system. a sort You've taken it or a XX% of that and efficient XX% And an efficient XX% answer.

-- power and second grid piece power, the of the have it's the comes grid sources generates is modulate. majority understand to reduction it, right? real this carbon can't where The how on of The we where the

or combined So your a plant base basically fixed it nuclear remains can and power your cycle at modulate.

cloud over the usually that's closes up the and solar power modulating out actually solar our there, So thing or if plant your If output. is goes gas down plant right? natural

probably against gas that's that's cycle. a really kind large because best up investor of quantify power got XX% making there, up big when CHP is look kind in than that of -- that's is to less because chillers the grid-efficient of And it basically of the that XXX-ton what out deck, nationwide, marginal your our grid. emissions. one in ends plant terms we latest that essentially So our And the And the that's it's you that's offset. your what what sitting at to addition, even turbine tried difference natural on compare would you so

of through the chiller cycling day is and at whole the because offsetting night to are keep some our If the that. in point the only isn't happening middle the marginal the basically, in So happening usage really you marginal frequency. day, it's

So what XXX-ton which taking equivalent pretty vehicles that XXX carbon it factor -- that And you significant. almost to big mean year, our one we're against passenger road. really of a offset emission it's of I that, the really when marginal is offsetting. off metric is chillers XXX tons

lower, still pretty than much If it's the any you cleaner use but U.S. it's grid a just almost little average, state the in the

Benjamin Locke

for way to community the not and for paper every Just marginal account acknowledge emissions scientific the even that things, utilities, average in numbers fudges as the matter, the emissions using bit. a these about proper average emissions

tons So Abinand said per XXX-ton chiller. XXX

Abinand Rangesh

Yes.

Alex Blanton

mean a an building Okay. what's And -- for how facility, the or reduction? I individual percentage

Benjamin Locke

else they're is, grid their what any what for –by-case, geographically is. building given depending case source doing, they what fuel really where or grid their hospital, It's and on Alex, are their is, mix what

be best, to agree to have ourselves, going can folks say of delivered have that of kind really, lot very very, smart mean So we and grid wish of don't. it. would the huge they the that going they're And then by understanding things of good good they and things that all we're I a be when it's a to that's ourselves we're case. kind dovetails to with and interacting for just this we understanding aren't we being about costs, me, sustainable. opportunity -- kind I been do but be developed just being be lot efficiently of have some to way see people of case it's see is and really it at does -- not everyone that us. pretty the these I that. we and potential is done things how better. and do that my well with very know in at And what At the and when this just run they of kind run energy a we see we cleanly operating understanding we listen everybody facilities of not see facilities. is the to thing. one into we've -- those these we at But and just when of worst And mix

the for to in more the that's so mix, grid we're good opportunity energy again, smartly course, type environment of future, carbon with to try footprint, into and and company. right, Alex. some bit all facilities. that's carbon way it The I want the and you controlled to do a of reduction, of that everything, these everything and And congruous the the at, together, And call think competitive the going comes we're

Alex Blanton

driven legislation be you do rather by And think than will subsidies? it

Benjamin Locke

environment, in going controlled by driven think legislation to subsidies. think don't the or I be I it's

forces is be gravy. of by to to that to I delivering just market on compared think driven top competition. what Anything and we're it's going them the

Alex Blanton

What what happen? mean But of like subsidy. kind that's meet about the going I is to some certain requirement a requirement for that standards. legislative building ITC, Is legislation

Benjamin Locke

XX has tickets, at that the have getting point happened, that already York, over in to reductions expensive parking start time. it some get incremental of mandates Yes, to New footprint so going And course, going they're case, you're local over they time, like where get of your time. in

So if exist. whatever I'm have -- talent that Yes, it sure not quite past. does that. But Boston's

doing part think part I you're people again, of the again, start a And more burning natural for of legitimizes saying national part case of that policy. really our again, as and outlined things you're that that to the policy. CHP Abinand on think site we're to be are the the that. doing energy and everything that going more is of that's as legitimizing COX you just energy that going solution And It because of -- absolutely some not to reduction. part seeing And must is gas, reasons problem. we're people

Alex Blanton

I non-cannabis? What a mean field -- growing is products. thing. of percentage growing is and vegetables more other One your indoor that there's

Benjamin Locke

a lettuce. Alex. a We've lettuce, I some We’ve got Yes, cucumbers. a sound cumbers, few think Yes. gardener. got We've we've like got I some got tomatoes, Yes.

a Alex, seeing I it lot mean though, to space, going trade that's trade of that cannabis the production we're, now again, not trade And the involved seeing located. things of not where I'll lot I'm grid in bit. course, now we these the to accept it, shows understanding getting understand understand and sense, the just makes is. in are fair a fruit make shows What how where fit but everywhere. going I We're we're more progress. a the But that. to mix And the being we're geographies the shows So that's thing. of

Abinand Rangesh

you're their more for much like stuff what until everything They're more greenhouses. starting recently, to AeroFarms, app say, in doors done lot control of example, And in like facilities like but harvest, building also, very take is facilities, A right? again, as of is But you're take some and not seeing see now. right? those there's

the are pilot just phase. away to from things move So starting

producers lot agriculture. bigger done had environment the a controlled pilot phase So controlled of now type

So that into a originally, it's to move thing just people starting could thought, because greenhouse. do okay, you

okay. You're

control by the environment open having vents agriculture But just right of the what finding and You come temperature. controlled your you kind could up produce. you really And that right to you economics of to that you're the overheating not end consumer. overeating lettuce, packaging, the close sure not do letters, freeze. have is that letting it kind that, or not you're And you're to end of premium make the

but of where then too. as to to the yet, built isn’t become So there's position ourselves people -- of realized, we're many going And that to vents okay, being that starting those those are be facilities, most educated. And haven't really just facilities opening in are not they're that's kind enough. suddenly

Alex Blanton

Thank you very much.

Benjamin Locke

Thank great you. Alex. Yes,

Operator

ahead. Please Thank Instructions] you. Our Michael go [Operator from comes Zuk. next question

Benjamin Locke

you Mike. Hi, are How doing?

Michael Zuk

Good good. educational morning. Pretty question. An

system. or only we microgrid not total everything, Because sales a thereof? and or Going product our microgrid in product for environment product segments, and sales agriculture it emphasizing of room to are the sales we different with but controlled combination emphasizing forward, all are seems me there's that chillers also

Benjamin Locke

Yes. Yes.

do to are massive here's or do like will rates What electric can't Mike. right, play they facility, how typically -- to need building power something. expensive You're there. out get we've enough a is They it been -- someone's trying

cell other on out in line the they in your out, there's can competitor line CHP with and then chillers I could plant, jockey anything do everybody guy of the is maybe they put put and would and myself. get that let's a inverters of all vendors, now the more. you a I need behind people all to jumped potentially, what ahead they no in don't maybe that because put But problem I like do I gas. sell them there's on CHP And there. my jumped line they're is there's get "Time electric say, chiller me, that potentially bunch in there. And maybe to they other could a so -- And fuel The and

a Now inverters. after maybe of of electrical gas, if still I'm and put XX I've done of them. them come bit well, in of could need our to maybe they few have whatever, little have that, don't after I've on course, they a And to these X,XXX taken with now constraint, they just have them, going tons of there cooling

their one finding distributors I these of is the X going partners, I think guys take as get geographies just off the new it. I we deputized it it off their specified that. line to that. when because be Mike, Not our added we of is network the load electric and the then nobody another a have And sales meg peers we of so else -- some out be I've And facilities understand We well. mean indeed, do first our be took talked sales inverter, their went. against took this and their about meg chillers. they load. agents, enabled that to some electric sales point off That had strategy hiring But gas-engine-driven here, everyone thing want salesman, as all everybody at to have like important means And I an will is piece is I chiller selling to expanding these them is that get takeaway, to for chiller the competitive inverter doesn't and because about before guys, that it and selling you I important

that recognize geography chiller whatever in are that can So they sell them. our the they only gave one I

I long chiller there, we'll cannabis course, stuff facilities, start know of get our any or So everybody And to going a question But of think kind we then, the Mike. whenever CEA the I after. we're out microgrid of push it's with your to to descend on of these way. answer

Michael Zuk

make That sense.

there. historic percentage Secondly, we chillers of into have a chillers new huge turned fleet are those What being out our of generation? existing over

Benjamin Locke

a Mike. good it’s question Yes,

the all parts my hitting meetings. You're sales of

right? been over year got might You they through, about finally ago, our years, XX have point fleet, to for testimony we Yukon a indeed, really our where to it's and had yes, couldn't the they remember, them So chillers a use circling anymore.

put chillers. those shiny new, brand we it, nice with we So blue replace

our so we our indeed fleet, try facilities go chiller old just find to have old but to and our to swap And opportunities campaign indeed, not even through to a Cogen fleet fleet things once year. out separate little ready And ready of drive a to are indeed, our hybrid out Rolodex and it's get newer product. that we next a roll have those with

Michael Zuk

city then noticed New And the legislation. I because New city. of contracts more incremental an requirements acceleration systems we've gotten to local of in the in you some of York see York conversion efficient Do

Benjamin Locke

so. think I

I weren't tell wave incentive hookups when in Mike. gas, think is and a permits this hit concerning. I'll was And so. went New of But the natural the and electrification cetera. allowed, getting York weren't away opinion, being That you, et my kind little

aside quickly said, people as realized, thing CHP pause. facilities. some And and is is I right, legitimizes good fears Act in rates, the those and of reasons these I expensive again, overall this us But why think in and again, gave solution. electric the high puts of more people prices throw the Inflation some a energy part really some because, of

through indeed York is excessive. recognizing I these So are are peak New the that charges demand rates roof going think ConEd the charges,

at incentive together. York. the now New in ITC, I economics to throwing see activity So time and the without even holding existed York think we're little this going more bit And that that are New a

into it make senses. to think incentive York once general come I fell a think went New energy in of their kind of low prices I the kind away, but are going to

Michael Zuk

why follow-up. the heat Ilios we just legislation, available not technology, which the forward. in that else And there technology noticed revenue I to since And we're don't a credits we royalty then are really get for one and pumps. small out-license that tax have somebody new stream pursuing, and go

Abinand Rangesh

a buildings. really different that’s into a unit seeing great things places -- We it's it's for central of the where mean of looking one that affects But and water. water heat loop heat in are that. only and legislation up apartment. single hot chilled there's some into things there it incorporated of -- like that I There's are the for don't New actually have pump, just kinds pumps being a point. that really that been things you're know, those every have -- ends lot some where being the like You York

that it's some of hasn't bit little an value It's something we're something aware happened, but a it's on there we but using unlock. is harder that but end. that a happen, that area we've So conundrum, could been might be our where this can definitely yet

Michael Zuk

to areas. answer questions. second half be And forward Well better of to the looking a I'm I particular now a to couple seem that focused appreciate we on

go and forward. congratulations So

Abinand Rangesh

Thank you, appreciate Mike. I it.

Operator

Thank floor no to further you. There this the are I'll remarks. time. Benjamin back at questions Locke for closing turn

Benjamin Locke

providing So us. updates next of call the joining looking again occur. and for And to as our be quarter. I'm talking thank always, I of course, all we'll listening they as to investors forward more

Operator

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

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