Tecogen Announces First Quarter 2022 Results

Revenues of $ 7.4 million, Positive Income from Operations and Net Income                    

WALTHAM, MA - (NewMediaWire) - May 12, 2022 - Tecogen, Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported revenues of $7.4 million and net income of $89 thousand for the quarter ended March 31, 2022 compared to revenues of $6.1 million, an improvement of $1.4 million, and a net profit of $1.8 million in 2021, a decrease of $1.7 million. The positive net income in Q1 2021 was primarily due to the benefit from the CARES Act payroll support programs. The company generated $1.9 million in cash from operations during the quarter and ended the quarter with a cash balance of $5.5 million.

Key Takeaways

Net Income and Earnings Per Share

  • Net income in Q1 2022 was $89 thousand compared to $1.8 million in Q1 2021, a decrease of $1.7 million,  primarily due to the forgiveness of the PPP loan in Q1 2021. EPS was $0.00/share and $0.07/share in Q1 2022 and Q1 2021, respectively. 

Income from Operations

  • Income from operations for the three months ended March 31, 2022 was $81 thousand compared to a loss of $139 thousand for the same period in 2021, an increase of $220 thousand. Our increased revenues combined with reduced operating costs resulted in positive income from operations. 

Revenues

Revenues for the quarter ended March 31, 2022 were $7.4 million compared to $6.1 million for the same period in 2021, a 22.8% increase.

  • Product revenue was $3.9 million in Q1 2022 compared to $2.1 million in the same period in 2021, an increase of 85.6%, primarily due to increased cogeneration and chiller unit volume. We continue to see sales into our key market segments including controlled environment agriculture. 
  • Services revenue was $2.9 million in Q1 2022 compared to $3.3 million in the same period in 2021, a decline of 11.1%, primarily due to reduced lower margin installation activity. Services contract revenue increased 4.8% to $2.9 million compared to $2.8 million in the first quarter of 2021. 
  • Energy Production revenue decreased 11.0%, to $582 thousand in Q1 2022 compared to $653 thousand in the same period in 2021 due to site closures as a result of COVID. 

Gross Profit

  • Gross profit for the first quarter of 2022 was $3.1 million compared to $3.0 million in the first quarter of 2021. Gross margin reduced to 41.6% in the first quarter compared to 48.7% for the same period in 2021 due to higher material costs reducing product margin from 44.7% to 32.9%.  Services margin remained comparable quarter to quarter. 

Operating Expenses

  • Operating expenses decreased by 2.6% to $3.01 million for the first quarter of 2022 compared to $3.09 million in the same period in 2021 due to reduced external commissions and gains on the disposal of assets and corresponding reversal of the unfavorable contract liability associated with the asset. 

Adjusted EBITDA(1) was a positive $154 thousand for the first quarter of 2022 compared to $20 thousand for the first quarter of 2021. (Adjusted EBITDA is defined as net income or loss attributable to Tecogen, adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on equity securities, goodwill impairment charges and other non-cash non-recurring charges or gains including abandonment of intangible assets and the extinguishment of debt. See the table following the Condensed Consolidated Statements of Operations for a reconciliation from net income (loss) to Adjusted EBITDA, as well as important disclosures about the company's use of Adjusted EBITDA).

“We saw a substantial increase in revenues this quarter and were able to produce positive operating income and net income. However we saw a significant increase in cost of goods due to the inflationary environment we presently find ourselves in. We have instituted price increases and continue to execute on our strategy of focusing on clean cooling in our key market segments including controlled environment agriculture. Our Board has formed a special committee headed by our Board member Prof. Ahmed Ghoniem to determine how Tecogen can help reduce the environmental impact of agricultural food products by expanding the use of our systems in the controlled-environment growing segment” commented Benjamin Locke, Tecogen's Chief Executive Officer.

Conference Call Scheduled for May 12, 2022, at 11:00 am ET

Tecogen will host a conference call on May 12, 2022 to discuss the first quarter results beginning at 11:00 am eastern time.  To listen to the call please dial (877) 407-7186 within the U.S. and Canada, or (201) 689-8052 from other international locations.  Participants should ask to be joined to the Tecogen First Quarter 2022 earnings call.  Please begin dialing 10 minutes before the scheduled starting time.  The earnings press release will be available on the Company website at www.Tecogen.com in the "News and Events" section under "About Us." The earnings conference call will be webcast live. To view the associated slides, register for and listen to the webcast, go to https://ir.tecogen.com/ir-calendar.  Following the call, the recording will be archived for 14 days.

The earnings conference call will be recorded and available for playback one hour after the end of the call.  To listen to the playback, dial (877) 660-6853 within the U.S. and Canada, or (201) 612-7415 from other international locations and use Conference Call ID#: 13672659.

About Tecogen

Tecogen Inc. designs, manufactures, sells, installs, and maintains high efficiency, ultra-clean, cogeneration products including engine-driven combined heat and power, air conditioning systems, and high-efficiency water heaters for residential, commercial, recreational and industrial use. The company provides cost effective, environmentally friendly and reliable products for energy production that nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint.

In business for over 35 years, Tecogen has shipped more than 3,000 units, supported by an established network of engineering, sales, and service personnel across the United States. For more information, please visit www.tecogen.com or contact us for a free Site Assessment.

Tecogen, InVerde e+, Ilios, Tecochill, Tecopower, Tecofrost, Tecopack and Ultera are registered trademarks of Tecogen Inc.

Forward Looking Statements

This press release and any accompanying documents, contain “forward-looking statements” which may describe strategies, goals, outlooks or other non-historical matters, or projected revenues, income, returns or other financial measures, that may include words such as "believe," "expect," "anticipate," "intend," "plan,"  "estimate," "project," "target," "potential," "will," "should," "could," "likely," or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

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

In addition to those factors described in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and on our Form 8-K, under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: fluctuations in demand for our products and services, competing technological developments, issues relating to research and development, the availability of incentives, rebates, and tax benefits relating to our products and services, changes in the regulatory environment relating to our products and services, integration of acquired business operations, and the ability to obtain financing on favorable terms to fund existing operations and anticipated growth.

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

Tecogen Media & Investor Relations Contact Information: 
Benjamin Locke
P: 781-466-6402E: Benjamin.Locke@tecogen.com

TECOGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

  March 31, 2022 December 31, 2021
ASSETS    
Current assets:    
Cash and cash equivalents$5,460,870 $3,614,463 
Accounts receivable, net                 7,631,611                  8,482,286 
Employee retention credit                 1,276,021                  1,276,021 
Inventories, net                 7,756,737                  7,764,989 
Unbilled revenue                 2,906,931                  3,258,189 
Prepaid and other current assets                    576,787                     578,801 
Total current assets               25,608,957                24,974,749 
Long-term assets:    
Property, plant and equipment, net                 1,705,974                  1,782,944 
Right of use assets                 1,716,737                  1,869,210 
Intangible assets, net                 1,140,925                  1,181,023 
Goodwill                 2,406,156                  2,406,156 
Other assets                    185,222                     148,140 
TOTAL ASSETS$32,763,971 $             32,362,222 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable                 4,402,772                  3,508,354 
Accrued expenses                 2,478,523                  2,343,728 
Deferred revenue                 1,446,048                  1,957,752 
Lease obligations, current                    653,176                     641,002 
Unfavorable contract liability, current                    295,065                     330,032 
Total current liabilities                 9,275,584                  8,780,868 
Long-term liabilities:    
Deferred revenue, net of current portion                    215,931                     208,456 
Lease obligations, net of current portion                 1,147,982                  1,315,275 
Unfavorable contract liability, net of current portion                    816,690                     929,474 
Total liabilities               11,456,187                11,234,073 
     
Stockholders’ equity:    
Tecogen Inc. shareholders’ equity:    
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 issued and outstanding at March 31, 2022 and December 31, 2021                     24,850                      24,850 
Additional paid-in capital               57,112,566                57,016,859 
Accumulated deficit              (35,744,212)              (35,833,621)
Total Tecogen Inc. stockholders’ equity               21,393,204                21,208,088 
Non-controlling interest                    (85,420)                    (79,939)
Total stockholders’ equity               21,307,784                21,128,149 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY32,763,971 32,362,222 


TECOGEN INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

 Three Months Ended
  March 31, 2022 March 31, 2021
Revenues    
Products$3,939,481  $2,122,722 
Services                 2,917,280                  3,281,144 
Energy production                    581,562                     653,295 
Total revenues                 7,438,323                  6,057,161 
Cost of sales    
Products                 2,644,756                  1,174,287 
Services                 1,366,752                  1,537,603 
Energy production                    336,027                     394,063 
Total cost of sales                 4,347,535                  3,105,953 
Gross profit                 3,090,788                  2,951,208 
Operating expenses    
General and administrative                 2,473,903                  2,453,853 
Selling                    501,091                     510,203 
Research and Development                    140,135                     126,150 
Gain on disposition of assets                    (33,945)                           — 
Gain on termination of unfavorable contract liability                    (71,375)                           — 
Total operating expenses                 3,009,809                  3,090,206 
Income (loss) from operations                     80,979                   (138,998)
Other income (expense)    
Other income (expense), net                    (14,150)                      (1,203)
Interest expense                        (828)                      (4,640)
Gain on extinguishment of debt                           —                  1,887,859 
Gain on sale of investment securities                           —                        6,046 
Unrealized gain on investment securities                     37,497                      37,497 
Total other income (expense), net                     22,519                  1,925,559 
Income before income taxes                    103,498                  1,786,561 
Provision for state income taxes                       3,930                        8,058 
Consolidated net income                     99,568                  1,778,503 
Income attributable to the non-controlling interest                    (10,159)                    (11,796)
Net income attributable to Tecogen Inc.$89,409  $1,766,707 
     
Net income per share - basic$0.00  $0.07 
Net income per share - diluted$0.00  $0.07 
Weighted average shares outstanding - basic  24,850,261    24,850,261 
Weighted average shares outstanding - diluted    25,028,616   25,122,271 


 Three Months Ended
  March 31, 2022 March 31, 2021
Non-GAAP financial disclosure (1)    
Net income attributable to Tecogen Inc.$  89,409  $1,766,707 
Interest expense, net                         828                        5,843 
Income taxes                       3,930                        8,058 
Depreciation & amortization, net                    107,061                     124,066 
EBITDA                    201,228                  1,904,674 
Gain on extinguishment of debt                           —                 (1,887,859)
Gain on disposition of assets                    (33,945)                           — 
Gain on termination of unfavorable contract liability                    (71,375)                           — 
Impairment of intangible asset                           —                        7,400 
Stock based compensation                     95,707                      39,085 
Unrealized gain on investment securities                    (37,497)                    (37,497)
Gain on sale of investment securities                           —                       (6,046)
Adjusted EBITDA $                 154,118                    19,757 


(1) Non-GAAP Financial Measures
In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, this news release contains information about Adjusted EBITDA (net income (loss) attributable to Tecogen Inc adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on investment securities, goodwill impairment charges and other non-cash non-recurring charges including abandonment of certain intangible assets and extinguishment of debt), which is a non-GAAP measure.  The Company believes Adjusted EBITDA allows investors to view its performance in a manner similar to the methods used by management and provides additional insight into its operating results.  Adjusted EBITDA is not calculated through the application of GAAP.  Accordingly, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure.  The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.

TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

  Three Months Ended
  March 31, 2022 March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:    
Consolidated net income $99,568  $1,778,503 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization                    107,061                     124,066 
Gain on extinguishment of debt                           —                 (1,887,859)
Stock-based compensation                     95,707                      39,085 
Gain on sale of investment securities                           —                       (6,046)
Unrealized gain on investment securities                    (37,497)                    (37,497)
Gain on disposition of assets                    (33,945)                           — 
Gain on termination of unfavorable contract liability                    (71,375)                           — 
Impairment of intangible asset                           —                        7,400 
Changes in operating assets and liabilities    
(Increase) decrease in:    
Accounts receivable                    850,674                     638,643 
Inventory                       8,252                     326,655 
Prepaid assets and other current assets                       2,014                      17,307 
Other assets                    152,888                   (583,419)
Increase (decrease) in:    
Accounts payable                    894,418                   (799,615)
Accrued expenses and other current liabilities                    134,795                     153,225 
Deferred revenue                   (504,229)                    (97,937)
Other liabilities                   (155,119)                    574,447 
Net cash provided by operating activities                 1,894,471                     369,772 
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment                    (80,873)                    (16,098)
Proceeds from disposition of assets                     64,669                            — 
Proceeds from the sale of investment securities                           —                      11,637 
Purchases of intangible assets                    (16,220)                      (5,682)
Distributions to non-controlling interest                    (15,640)                    (18,176)
Net cash used in investing activities                    (48,064)                    (28,319)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from note payable                           —                  1,874,269 
Net cash provided by financing activities                           —                  1,874,269 
Net increase in cash and cash equivalents                 1,846,407                  2,215,722 
Cash and cash equivalents, beginning of the period                 3,614,463                  1,490,219 
Cash and cash equivalents, end of the period$5,460,870  $3,705,941 

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