- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Tecogen Third Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to our host, Jack Whiting, General Counsel and Secretary. begin. may you you, Thank

Jack Whiting

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

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

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

Benjamin Locke

Thank Jack. you,

agenda results. the company a as XXXX a overview, our quarter indicates, start with So, we'll detailed slide review followed third brief on of by four

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

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

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

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

six. slide to Turning

Our as and features operate can congested, systems grid increasingly becomes power increasingly the microgrids as are for and important the distributed burden, here. These shown grid costly. generation as on left generation resiliency

commercial for our distributed Tecogen system, In offers solutions industrial cooling and addition to generation facilities. clean

tremendous indoor products provide lower had We've shown amount cooling chillers success a with gas to precise this These our operating conditions. Our particular agriculture. greenhouse power operations middle maintain with and grow traditional solutions. use compared in controlled of slide, clean reduced the growth to use footprint of customers cooling in environment costs for a

dehumidification. facility heating reduced needed and and heat substantially chillers the operate providing capacity facility, to electric Our simultaneously for amount while the cooling of

food I our this facilities production more the environment call. later success has the separate to in participation CEA will the Our to extend our in efforts about expand us the in agriculture sector. business led of market controlled development scope in talk

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

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

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

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

Abinand Rangesh

in was revenue $X period by product you, Thank segments million due to detail but XXXX. segment will increase a Ben. revenue, the million, compared the XX.X% I the to all more in slide. $X.X in later showed during mostly in QX same discuss This growth. was revenue increase

due balance materials. QX higher was compared at Gross cash the of the at slightly end million, of XXXX. Our $X.X to cost decreased higher was the XXXX, the end quarter than of to XX% XX%, which to from margin

XXX,XXX, adjustments higher shipped of $X.XX QX XXXX at loss million. XXXX and that EBITDA. lower higher with the orders per was to XXX,XXX QX the QX loss increased revenue was margins share. Protection adjusted $XX,XXX. loss retention was of Performance X.X% increased impacted the credit. was higher was particular, the The to and income was further chiller. favorably the We EBITDA employee and of employee due in EBITDA The due of and price hybrid the In the to R&D reserves the loss net revenue because a over the In EBITDA income $X.XX credit adjusted price be retention XXXX reduction a loan. forgiveness compared and or by to $XXX,XXX of Paycheck million, QX chiller XXX%. the quarters. was cooled the EBITDA the the was segment. $X.X bad XX%. $XXX,XXX. expenses in by Products was This in upcoming XXXX, to development QX in by costs due partially were net earlier to loss debt expenses instituted making increases Some operating plan had air were year. Operational associated

offset Our XX% price the by and product contract QX service number in XX% increased margin associated Service compared materials, increased to of from revenue price the contracts. QX of increases. with due due decreased to to increases partially increased to XXXX, XXXX, those X%, cost

the XX%. XX%. back revenue to XX% margin Our X%. increased The increased takeaway. to service to now overall compared will Energy Energy to quarter-to-quarter. by talk from XX%, was XX% production increased the production hand gross margin margin to Ben about earnings call I

Benjamin Locke

Thanks, Abinand.

turning XX. So feel discuss are I from important takeaways what slide the the quarter. I'll to

in an cogeneration even driven course, up and product. growth, is I mix sales revenue think over XXXX. by QX product chiller of with of increases biggest XX% of the the This takeaway, was

seen controlled make you've the buildings quarter, through agriculture, market we key such schools As as continue the large in to or in residential municipal multiunit segments, environment other buildings. press throughout releases progress

year. pleased partnerships we Some new earlier as we of this multiunit first order ESCO, these expecting orders this additional receive attribute In sales the particular, large were sales established are order is and from to a from builds. our to are the directly ESCO. This relationship

starting domestic are XX% to and our transferable the be get cogeneration we both because is The investment content up credit ITC parties. systems. third tax satisfy our for to new Next, on the chiller products definition and worth new requirements to may more

final in Importantly, IRS the many are be pay energy in awaiting customers. the ITC how the from our a monetized has ITC and industry details direct the alternative nonprofits clean for by municipalities. new the others can We, like

We guidance expect month. this next

testing chiller Another the our through help will occurred hybrid the commercial but later Gas takeaway AC bring the after ended, Institute drive important quarter launch in of in Technology with collaboration announced XXXX. Tuesday anticipation

the And to more to lastly, regard residential. of in effort to of good of work is the with multiunit companies core and continue backlog ended hope in in establish chart, as this as the markets it's We after of as see a hybrid with I ongoing can backlog $X.XX product coming GTI expect $X.X testing yesterday the such drive and various quarter months. demonstrations to you million. announcements And for pilot mix our our CEA gas was we the a complete. have product million

our service in we backlog not and reminder, production a energy include calculation. do As our recurring revenues

of space. controlled in Turning slide provide color I'd our to development to agriculture a the bit efforts on XX. environment like business

energy As CEA sold we control. our the agriculture and is tons cooling focus The of varies of planning on dehumidification are energy intensity depending grow there where a cases, year, for expanding each XX,XXX already crop lights, in to cannabis both earlier controlled areas there over facility use on type environment is we of many the offering have our and one is cases, level of tremendous In required load. the the food all had of facilities in mentioned and cooling climate to facilities.

cases by in of up offers cooling used can energy The in and also a XX% where need is generated reduction upwards especially to for large dehumidification. boost to solution there expenses, plant growth exhaust utility be XX%. Our

already have We crop have -- utilize equipment equipped we to are facilities sites to starting in COX. specify and multiple the already food

business to further a Turning CEA new we unit. To ambitions, established slide XX. our

being a package known produce, energy entirely. needs will footprint the identifying intensity of The be and simple add modular working carbon carbon off-grid creating developing operate a with install for agriculture [ph] a focus while sizes grown upwards great brand on value. cases, are we also facility new from controlled energy or, to constraints able lowest anticipate We CEA to having capacity in alleviate environment a Greens container their to NetZero as multi-acre single are for handle farm. footprint growers We where for and can lowest the we on some

algorithm real-time real-time energy sources, New grow drive incentive increase conjunction provides facilities this and be gas for to graphic growers, our a from way to already the a will to and The into begun slide controls, The the of have for tax optimize offering of technology cost next products. mechanisms applied will small-scale also testing utility tax facilities, solar, CEA this plan facilities. to partnership and power expansion and step and Working optimization using the in engine investment build snapshot mix. prototype. XX with the develop our mix case, for credit, reducing ISO, technology same build receive by the business and utility on building we carbon the grid, efficient our Using England. In to with chiller blends pilot our of As all model growing operation shows we be clean determine costs, air-cooled algorithms segment. the intensity other this to a greenhouse to indicates, reduce operational and hybrid for financing the grid The left costs yield products. the facilities CEA a in

been shown the Finally, slide that the growth to grow XX, I'd on company. like to revisit pathway to on we've focused

clean cooling resiliency, the seeking where First, the we continue energy can't for facilities we technology with existing savings our are solutions particularly requirements. and facility's make to meet progress the when grid for chillers best power electric

mentioned, are to showcase our in in with America. drive the will The many trade hybrid we Atlanta, CEA, developing at show Next, we substantially XXXX in is in potential next-generation as largest HVAC expect track the on our hybrid collaboration, AHR North I Expo and particularly expand air-cooled the markets, drive GTI chiller. it February which sales in

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

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

as to grid increased tax for as due result Act as grid ITC the expect and much new contained the mentioned constraints can electricity supply I Reduction systems. electric burdened in credit our nation's the in as Inflation aging to becomes We And overloaded XX% continue demand. further a earlier,

environment we agriculture. discussed, controlled established business unit new a as focused Finally, on

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

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

the We are to investors and updates CEA discussions Tecogen in market have can with our hope CEA for focused on additional operating more facilities maintaining progresses. and play as developing, in roles that participants

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

Operator

Tgra from at session. Instructions] time, Please our comes conduct we'll Capital. Church Our question And your this state with question-and-answer question. first Bill [Operator

Bill Church

Good you. Thank Yes. morning.

Benjamin Locke

to you. morning Good Bill. Hi,

Bill Church

farming, and Hi. Good with this And one -- morning. I'm the has Canadian forth. to do the if market. and companies’ vertical think CEA crop so some of question includes My I thinking

Benjamin Locke

that greenhouse have the single where from So, is just with don't a full right been energy have our are a without anything with non-vertical can most does much or that completely include but farming. it's everything pretty whether controlled of facilities CEA, and yes, whether and requirements enclosed layer. vertical vertical greenhouses We It include to open it similar, firms, you're anywhere a -- now, -- control. having windows, climate

vertical definitely we So -- to can no farming energy our applied with can issue. be solutions

Bill Church

that, And be Yes. it would last about an a on companies two. See, I Canada, is research like I quite I've the looked weather year that's conducive to growing thinking that it some or interesting have up guess is where opportunity. of Canadian raised some capital apply in not in that of specifically been here, was doing as these the but lot as

So, you. thank

Benjamin Locke

some a farm have cucumber at equipment Yes. Canada. in We actually

Jack Whiting

Ontario.

Benjamin Locke

in Ontario, Yes, yes.

Bill Church

okay. -- Well well,

Okay.

Benjamin Locke

Yes.

that the stuff. been we've the one. cucumber talked course, crops I But with, mentioned involved think we again, the food of crops we've -- about the again, cannabis

leafy got most to the the -- I from food where again, to what if of the think farming exposure and do? needed course, one all give intensive and you denominator that's are you it lot is vertical do these the and the the can't, with the these a we've growing seeing where all the And and build, probably standpoint, potential enough? on common energy in. one And we're is grid to are greens very techniques. expansion conducive again, into of things grid crop is is the going they can And

Bill Church

yes. yes, Yes,

very you Thank Good. Okay. much.

Benjamin Locke

Yes. talk Bill. you to with Nice

Operator

Alex Harbor Management. Clear Asset Blanton Our Instructions] question. your next with from [Operator Please, state question comes you. Thank

Alex Blanton

Hi. Thank you.

Benjamin Locke

Alex. Hello,

Alex Blanton

the congratulations and on in the increase Ben, very good backlog. quarter a

Benjamin Locke

Thank you.

Alex Blanton

That's good to numbers. a thing a the I'd it easy you put that the do, website. like really makes report home find the to quarterly the fact link to it of very because on page the

Benjamin Locke

glad Sure. that, I'm it and I'm glad helpful. you was found

Alex Blanton

good. Very

could anything you to, industry, have we On associations? learn about you have the more some industry CEA Do that to like, do organizations, go that? industry, that references trade like

Benjamin Locke

that things being hydroponic the I our done cannabis. by think, art space. cannabis which this Well, and CEA is growing, of our trade the only proxy the the my the the some to other those shared talking growers of it about The of Alex, into by the growth of within really way via show And -- cannabis intent way, saying intensive of growing goes is I'll as technology exposure a the that's all answer Yes. interactions. lot like is facilities is and

In fact, week next one. is a big

to but MJBiz, providing and greens. cannabis. people have some one which facilities build week Next is probably in in doing. greenhouse going be there there. because, not it's called just of They're we're one to course, cannabis, and in And in you shows the again, cucumbers team just they're It's also let and in probably don't of going Vegas. growers course, know relationships MJBiz. with a leading year. guys the the it, be the these in of Las inroads not the We'll But be investing cannabis the each it's to development of providers make investing business of country going into leafy things. They're money to investing to of and on other we're But it's these these whole

within with the So event elbows cannabis-focused we rubbing we it's want though CEA fully next anticipate elbows to be a that guys rubbing the even week, space.

Alex Blanton

talking you BIZ? Are Biz?

Benjamin Locke

yes. BIZ, MJBiz, yes.

Alex, trade probably is, But we're what e-mail that show booth might biggest trade I'll you You get yes, can an it, on us, do our sure e-mail a country. MJBiz because even et the cannabis the from in and make thing, cetera. preshow you're number is to going see

Alex Blanton

give little did relationship? you you that you. a us did Why take Thank potential ESCO, color, how get The more on? What's the Okay. so on? and they you from relationship new could that

Benjamin Locke

previously. were, actually Well, in Tecogen working not But a is focusing around thank using that that on competitive doesn't fact, And the want time, indeed with developing decided the it noticing for and development very us. it's they we for exist focus you products been that, reasons ESCO it And for Tecogen that in using whatever efforts a on products. had anymore. because Alex, actually their is an at product. projects -- good ESCO to was that They've situation

initial we we now, this from them fully I a so announced, Abinand, was guess, with September, had right few order orders for And units. We that more it them. a anticipate

in do got sales I new somebody throw good proposition. drive name what In collaborative, seeing Alex, as you'll don't and sales hugely now. was we've those fact, selling can't doors it's forward we've driving a us, be it's sales partners for very our with right that's that And our drop, really coming we're that relationships -- have And you We do sales not relationships want because good think, efforts the good collaborative, where not development and us, that's much knocking someone we and us that things different we support these a to established pretty new I we've I that But developed, us. know, of and resourcing. in folks. doing with our work, is best the And to different technical and sales could again, quite extent you doing support but them important out terms the to are of agents, backup in place side on there reps, all for past, and sales sales. now maybe winning ITC, and chiller very is the on that the for of Alex, a just some for got

Alex Blanton

more Thank you. One question.

material by prices To constrained price the cost be your On you're new going what too. extent with mentioned that backlog fixed there's the and forward, I might up-to-date a that by margins because labor we'll in costs. pricing have increases. your contracts lower effect freight, affected contracts pricing you assume are were side, that

Benjamin Locke

and It's right. for want color. out going in but can sometimes the are you new months some project getting but days, But when was right price that margins things a because And was We you're up the And spot-on XX what was with maybe or some forward. projects it flexibility a all committed those speed, succeed. answer, give -- question, now and increases Alex, new it allow give and I pricing our proposals slowly few pricing on to good is lower I'll going a forward getting to to to we're pricing pricing. going to ago

And XXXX, of the come we so Alex, good times, we're with that delivery for and you're increases challenge, chain add? adjustments out or to we've exactly But with entire need that to think will to to it's and that terms right, made you there And can in I a that deal complain they have about backlog. times me, sure tell be. our increases it. right the we And our lead et things, I are and issue, making world I margins the our timing so reflect and now of get it price price all want proposals our hope in pretty about maintain inflation where those dealing back in the cetera. market that levels inventory don't our Anything that to it's the are up to is to what it's not ought supply just don't pricing

Jack Whiting

like you quarters be the thing full this going right, bit price. the new in as of going an last compared couple we is, to have only a you're will increase quarter, usually, next part saw little margin to to The quarter, of saw I that Yes. -- there's of but was in add

lower Some prices. them of slightly have might

XX% material that Just allows raise with more customer overall today investment has fact -- project. is off, further to happened tax it an just prices level the are is we fundamentally, credit but prices because discount actually on us to where to going we're but the see get starting what a than of the

us gives little that than So pricing flexibility a earlier. more

quarter margin even we -- in as projects we of bit that can some the if hopefully, a the -- might see have once we or next we'll prices year. get lower of from so, slightly commensurate a So were where able quarter, into the our second IRS out, margin third comes guidance they get we and to last raise sure be with the making little

Alex Blanton

chain you. Any shortages? with supply Thank problems

Benjamin Locke

of in managing our time you But much answer. How delays own able to to the We're planning commitments But We're Alex, to right? do to can -- making. meet this here, getting want not into time the long is again, headache, finding working and else we that's because we're importantly, Hey, all delays that's really about those detail lead we service, items backlog. alternative we're top be Yes margins particular. mention and our going something we're have? to without there. needed of it's don't it. I our service been we're it vendors. But into been not customers, we've want And We it. at wanted in our to point, about without but say on

to Just escalators up, are goes -- has inflation as CPI driven so -- tied service so you service that our contracts. of so know, our and contracts our all have

So escalators initiate like which contract price built have and It's the products go that have those our increase all the in. a to nice. self-adjusting, to customers is we with that's where not service

confident feel pretty not effects affect the to inflationary going are we And service so that margins. our

Alex Blanton

The That's available That's will news. on your this -- call of good text be site? terrific. transcript

Benjamin Locke

Yes, I hours. next think XX

Jack Whiting

takes eventually, be, it. I got you but Alex. will sure think time, it it some make We'll

Alex Blanton

have. to Yes. good That be would very

you much. Thank very Okay.

Jack Whiting

Alex. Thanks, right. Bye-bye. All Yes.

Operator

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

Benjamin Locke

Mike. Hi,

Michael Zuk

everybody. York us the opportunities morning, an City? on New Good you give challenges in Ben, still update and could

Benjamin Locke

of Yeah, Sure. course.

there. on a but up, still high. is rates opportunity some gone City York maybe Gas things for aside put has that that's fine. great political equipment, still Electric are if our New go you

up, heat naturally would them gone we're well. gas gas if boilers supplying have to to would course, As have Mike, because run we you their gas the needed and they know, goes as up, hedge that with of

our up And environment drives gas. the rates which going electric natural creates prices So of equipment. the for course, up, gas naturally hedged we're with

us. Local Local New York requires that have We've amounts mandate and And XXXX for prime remains start to might before, to talk certain had opportunity be people still paying a you this of orders of about footprint there XX, suppose or tickets. it that quarter. so those us carbon couple I law, Law a this heard then And out each they handing going to reduce by tickets, you're to have their going parking in to their year. XXXX, building they're start parking have,

cogeneration It And help reduces carbon your footprint. so our that situation. systems

So that continue there market is not the even we all still for though in very for York, back to it's support the in there. no cogeneration incentive, even have though cogeneration day, sales it New the still be and forces to is used natural strong are

Michael Zuk

And subject hydrogen use then fuel? competitive to our stoker we how to as change have a the equipment if is the slightly, opportunity

Benjamin Locke

question. to X% a if pipeline lot, Well, pipeline. what always of is burn think hydrogen that's up with point the that's I'm come And that. way The the a and can about the out a I got I hydrogen gets has question the comes to live going injection, Mike we've it, fine.

out hydrogen fundamentally burn handle that the and it, you XX%, the of hydrogen hydrogen is to I that. this, along somewhere pipeline I'm other just the all be I'll I'm not with appliance be handle percentage on have the know, to with I'm mean, to other my it, fine word like perhaps. assumption, long is just pipeline with gas at the be with them, to is appliances end fine And I'm the going all appliances me, it developing that, that every XX% on going As because so they be with engineer, I'm going the that pipeline of fuel, so developing, the that and And comes If hydrogen But going it's you equipment pipeline that Mike, into can not of it go so goes burn can't that the so that just and the to addition XXX% right? other other start I. at can I as, because fine pipeline. can those filling end can that believing well, much can count

Michael Zuk

then And on Got you. what's California? in the opportunities status

Benjamin Locke

distributed to you burning in like asked our get the because for don't have that Well, interesting to fuel an because interconnect generation California, fossil assets. is little But a you chiller. we on a permit continue Yeah. think they where chillers, in generation really California tricky California I don't focus

air we have have get of You to an Ultera course, emissions. but permit, our

So we're too not concerned about that.

in in term So of inflation with this of still the the -- we're aspects opportunity near whole had incentives a Mike, Act is chillers. to Reduction the lot California some understand again, trying of the back for microgrid controllers. wasn't And the I'd cabinet ITC ITC the that box of door CHP, the because I green microgrid controller. getting my on microgrid If our is through get a we're controller.

the doing more we they're even the going really California we how on more and again, opportunity in opportunity might to is be need now. IRS guidance So I to it to do there. see we're to if be out there's going to lay But what think able see than

Jack Whiting

a that chiller electric if fact a also regulation for moving, could California, and drive are was opportunities California. various which good developed haven't time, California when sense, the always with okay then in that likely in to seem peak some basically, wanted the kind cannabis see generators add some and of drive some to events an in diesel at second maybe available. run only short periods The Mike, money, using an of hybrid unlock it's backup the have could with on using clean a using be on to as And for necessarily save that space source you that things because create of or the the we there, seem treat And potential that those we're chiller clients they that demand projects other in still just not gas thing just an for a electric chiller is opportunities that way starting or hybrid to with our to running that, but grid I issue is still renewable a seen the product. could piece be there's an way backup. least engine engine-driven And a chiller being so might with also gas

Michael Zuk

Well, electric again, the forward continued Thanks. work. progress. CEA especially good the with that's to I area and congratulations Keep up on look the the chiller, made, in and new being progress

Benjamin Locke

it, Take care. Appreciate Mike.

Operator

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

Benjamin Locke

Yeah.

all our you thank call. So for joining

in months March, won't be until but anticipate as our further call next go and updates the year-end on, CEA call particularly markets our for core Our space. have we'll in I that

So for investors. I'm your going to prospects future, them feeling really our thank for with share confident you about the I hope and all you forward.

Operator

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

Tecogen (TGEN) 11 Nov 222022 Q3 Earnings call transcript