Q3 2023 Revenue of
"We continue to make progress towards the objectives we set out earlier in the year. We have seen revenue increase this quarter both compared to earlier this year and to the same period last year. We have focused our marketing efforts on finding project developers for our clean cooling solutions, especially in locations that are more favorable to gas technologies. This is leading to an increase in the size of our sales pipeline and I'm cautiously optimistic that we will receive customer orders for many of these projects over the upcoming few months.
“We also saw an increase in product margin due to increased pricing and the product mix this quarter. We expect service margin to recover to greater than 50% in the coming quarters after we complete pending engine replacements and continue to implement changes that should increase our service intervals.
“As we work to strengthen our balance sheet, I am pleased to see a decline in inventory levels compared to earlier in the year. We established a
“Lastly, the air-cooled chiller testing is progressing and we are working on getting this product specified on customer projects and obtaining purchase orders," commented Abinand Rangesh,
Key Takeaways
Revenues
- Revenues for Q3 2023 were
$7.1 million compared to$6.6 million for the same period in 2022, a 7.5% increase.- Products revenue was
$2.9 million in Q3 2023 compared to$3.2 million in the same period in 2022, a decrease of 8.4%, primarily due to decreased cogeneration sales which was offset partially by higher chiller sales into our key market segments including controlled environment agriculture. - Services revenue was
$3.8 million in Q3 2023 compared to$3.1 million in the same period in 2022, an increase of 24.8%, primarily due to revenue from the acquired Aegis maintenance contracts and a 5.2% increase in revenue from existing contracts. - Energy Production revenue decreased 0.5%, to
$331 thousand in Q3 2023 compared to$333 thousand in the same period in 2022.
- Products revenue was
- Revenues for the nine months ended
September 30, 2023 were$19.2 million compared to$20.5 million for the same period in 2022, a 6.0% decrease.- Products revenue was
$7.1 million in the nine months endedSeptember 30, 2023 compared to$10.2 million in the same period in 2022, a decrease of 30.1%, primarily due to decreased cogeneration and chiller sales into our key market segments including controlled environment agriculture. - Services revenue was
$10.9 million in the nine months endedSeptember 30, 2023 compared to$9.0 million in the same period in 2022, an increase of 20.8%, primarily due to revenue from the acquired Aegis maintenance contracts and a 7.3% increase in revenue from existing contracts. - Energy Production revenue decreased 4.2%, to
$1.21 million in the nine months endedSeptember 30, 2023 compared to$1.27 million in the same period in 2022 due to temporary maintenance work on two sites.
- Products revenue was
Net Loss and Earnings Per Share
- Net loss in Q3 2023 was
$0.5 million compared to net loss of$0.3 million in Q3 2022, an increase of$0.2 million , primarily due to increased operating expenses. EPS was a net loss of$0.02 /share and a net loss of$0.01 in Q3 2023 and Q3 2022, respectively. - Net loss for the nine months ended
September 30, 2023 was$2.8 million compared to net loss of$1.0 million in the comparable 2022 period, an increase of$1.7 million , due primarily to lower Products segment revenue and gross profit and an increase in operating expenses. EPS was a net loss of$0.11 /share and a net loss of$0.04 /share in the nine months endedSeptember 30, 2023 and 2022, respectively.
Loss from Operations
- Loss from operations for Q3 2023 increased to
$0.4 million compared to a loss of$0.2 million for the same period in 2022 due to higher operating expenses. - Loss from operations for the nine months ended
September 30, 2023 was$2.6 million compared to a loss of$1.0 million for the same period in 2022, an increase of$1.6 million . The loss from operations increased due to lower revenue and gross profit margins in our Products segment and increased operating expenses.
Gross Profit and Gross Margin
- Gross profit for Q3 2023 was
$2.9 million compared to$2.9 million in the third quarter of 2022. Gross margin was 41.1% in Q3 2023 quarter compared to 43.7% for the same period in 2022. Products margin increased to 43.2% from 35.3%, due to price increases instituted in 2023, while Services margin decreased to 38.9% from 51.8%, due to higher labor and material costs. In particular, as supply chain constraints for engines eased, we performed significant engine related replacements and upgrades which negatively impacted Service margins. Energy Production margin decreased to 48.5% in Q3 2023 from 49.5% for the same period in 2022. - Gross profit for the nine months ended
September 30, 2023 decreased to$7.9 million compared to$8.7 million in the same period in 2022, a decrease of$0.8 million . Gross margin decreased to 40.8% in the nine months endedSeptember 30, 2023 compared to 42.4% for the same period in 2022. Products margin increased to 36.6% from 33.7%, due to price increases instituted in 2023, and Services margin decreased to 43.7% from 52.2%, due to higher labor and material costs. In particular, as supply chain constraints for engines eased, we performed a significant number of engine replacements in the nine months endedSeptember 30, 2023 which negatively impacted Service margins. Energy Production margin deceased to 40.1% from 42.7% due to decreased runtime at the sites.
Operating Expenses
- Operating expenses increased by 6.0% to
$3.3 million in Q3 2023 compared to$3.1 million in the same period in 2022 due primarily to an increase in bad debt expense, due to a customer accounts receivable settlement achieved in 2022, and increases in depreciation and amortization, travel, and business insurance, which are attributable in part to the Aegis acquisition. - Operating expenses increased by 8.4% to
$10.5 million for the nine months endedSeptember 30, 2023 compared to$9.6 million in the same period in 2022 due primarily to an increase in bad debt expense, due to a customer accounts receivable settlement achieved in 2022, and increases in depreciation and amortization, travel, and business insurance, which are attributable in part to the Aegis acquisition and increased consulting costs.
Adjusted EBITDA(1) was negative
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About
In business for over 35 years,
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:
Abinand Rangesh
P: 781-466-6487
E: Abinand.Rangesh@tecogen.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 646,161 | $ | 1,913,969 | |||
Accounts receivable, net | 7,694,571 | 6,714,122 | |||||
Unbilled revenue | 1,748,336 | 1,805,330 | |||||
Employee retention credit receivable | 46,148 | 713,269 | |||||
Inventories, net | 11,039,313 | 10,482,729 | |||||
Prepaid and other current assets | 420,317 | 401,189 | |||||
Total current assets | 21,594,846 | 22,030,608 | |||||
Long-term assets: | |||||||
Property, plant and equipment, net | 1,254,656 | 1,407,720 | |||||
Right of use assets | 754,957 | 1,245,549 | |||||
Intangible assets, net | 2,307,902 | 997,594 | |||||
3,129,147 | 2,406,156 | ||||||
Other assets | 145,237 | 165,230 | |||||
TOTAL ASSETS | $ | 29,186,745 | $ | 28,252,857 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 4,493,758 | $ | 3,261,952 | |||
Accrued expenses | 2,632,607 | 2,384,447 | |||||
Deferred revenue, current | 1,655,737 | 1,115,627 | |||||
Lease obligations, current | 367,938 | 687,589 | |||||
Acquisition liabilities, current | 775,991 | — | |||||
Unfavorable contract liability, current | 201,090 | 236,705 | |||||
Total current liabilities | 10,127,121 | 7,686,320 | |||||
Long-term liabilities: | |||||||
Deferred revenue, net of current portion | 290,226 | 371,823 | |||||
Lease obligations, net of current portion | 429,737 | 623,452 | |||||
Acquisition liabilities, net of current portion | 1,485,677 | — | |||||
Unfavorable contract liability, net of current portion | 448,695 | 583,512 | |||||
Total liabilities | 12,781,456 | 9,265,107 | |||||
Stockholders’ equity: | |||||||
Common stock, | 24,850 | 24,850 | |||||
Additional paid-in capital | 57,525,719 | 57,351,008 | |||||
Accumulated deficit | (41,033,259) | (38,281,548) | |||||
16,517,310 | 19,094,310 | ||||||
Non-controlling interest | (112,021) | (106,560) | |||||
Total stockholders’ equity | 16,405,289 | 18,987,750 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 29,186,745 | $ | 28,252,857 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended | |||||||
Revenues | |||||||
Products | $ | 2,938,789 | $ | 3,206,732 | |||
Services | 3,842,600 | 3,078,604 | |||||
Energy production | 331,141 | 332,774 | |||||
Total revenues | 7,112,530 | 6,618,110 | |||||
Cost of sales | |||||||
Products | 1,669,747 | 2,074,243 | |||||
Services | 2,346,384 | 1,482,355 | |||||
Energy production | 170,378 | 168,178 | |||||
Total cost of sales | 4,186,509 | 3,724,776 | |||||
Gross profit | 2,926,021 | 2,893,334 | |||||
Operating expenses | |||||||
General and administrative | 2,708,817 | 2,343,449 | |||||
Selling | 425,465 | 567,529 | |||||
Research and Development | 160,033 | 202,138 | |||||
Gain on disposition of assets | — | (5,486 | ) | ||||
Total operating expenses | 3,294,315 | 3,107,630 | |||||
Loss from operations | (368,294 | ) | (214,296 | ) | |||
Other income (expense) | |||||||
Interest and other income expense, net | (16,330 | ) | (7,140 | ) | |||
Interest expense | (6,357 | ) | (2,280 | ) | |||
Unrealized loss on investment securities | (56,246 | ) | — | ||||
Total other income (expense), net | (78,933 | ) | (9,420 | ) | |||
Loss before provision for state income taxes | (447,227 | ) | (223,716 | ) | |||
Provision for state income taxes | — | 5,922 | |||||
Consolidated net loss | (447,227 | ) | (229,638 | ) | |||
Income attributable to the non-controlling interest | (34,346 | ) | (27,074 | ) | |||
Net loss attributable to | $ | (481,573 | ) | $ | (256,712 | ) | |
Net loss per share - basic | $ | (0.02 | ) | $ | (0.01 | ) | |
Net loss per share - diluted | $ | (0.02 | ) | $ | (0.01 | ) | |
Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | |||||
Weighted average shares outstanding - diluted | 24,850,261 | 24,850,261 |
Three Months Ended | |||||||
Non-GAAP financial disclosure (1) | |||||||
Net loss attributable to | $ | (481,573 | ) | $ | (256,712 | ) | |
Interest expense, net | 6,357 | 2,280 | |||||
Income taxes | — | 5,922 | |||||
Depreciation & amortization, net | 168,684 | 107,250 | |||||
EBITDA | (306,532 | ) | (141,260 | ) | |||
Stock-based compensation | 68,775 | 69,118 | |||||
Unrealized loss on investment securities | 56,246 | — | |||||
Adjusted EBITDA | $ | (181,511 | ) | $ | (72,142 | ) |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Nine Months Ended | |||||||
Revenues | |||||||
Products | $ | 7,094,556 | $ | 10,156,328 | |||
Services | 10,931,744 | 9,046,075 | |||||
Energy production | 1,214,806 | 1,268,623 | |||||
Total revenues | 19,241,106 | 20,471,026 | |||||
Cost of sales | |||||||
Products | 4,500,771 | 6,734,465 | |||||
Services | 6,159,855 | 4,322,693 | |||||
Energy production | 728,124 | 726,297 | |||||
Total cost of sales | 11,388,750 | 11,783,455 | |||||
Gross profit | 7,852,356 | 8,687,571 | |||||
Operating expenses | |||||||
General and administrative | 8,418,581 | 7,642,183 | |||||
Selling | 1,426,321 | 1,572,221 | |||||
Research and development | 625,691 | 537,126 | |||||
Gain on disposition of assets | (19,950 | ) | (41,931 | ) | |||
Gain on termination of unfavorable contract liability | — | (71,375 | ) | ||||
Total operating expenses | 10,450,643 | 9,638,224 | |||||
Loss from operations | (2,598,287 | ) | (950,653 | ) | |||
Other income (expense) | |||||||
Interest and other expense, net | (36,562 | ) | (22,556 | ) | |||
Interest expense | (8,629 | ) | (15,841 | ) | |||
Unrealized gain (loss) on investment securities | (18,749 | ) | 37,497 | ||||
Total other income (expense), net | (63,940 | ) | (900 | ) | |||
Loss before provision for state income taxes | (2,662,227 | ) | (951,553 | ) | |||
Provision for state income taxes | 32,252 | 16,352 | |||||
Consolidated net loss | (2,694,479 | ) | (967,905 | ) | |||
Income attributable to non-controlling interest | (57,232 | ) | (55,616 | ) | |||
Net loss attributable to | $ | (2,751,711 | ) | $ | (1,023,521 | ) | |
Net loss per share - basic | $ | (0.11 | ) | $ | (0.04 | ) | |
Net loss per share - diluted | $ | (0.11 | ) | $ | (0.04 | ) | |
Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | |||||
Weighted average shares outstanding - diluted | 24,850,261 | 24,850,261 |
Nine Months Ended | |||||||
Non-GAAP financial disclosure (1) | |||||||
Net loss attributable to | $ | (2,751,711 | ) | $ | (1,023,521 | ) | |
Interest expense, net | 8,629 | 15,841 | |||||
Income taxes | 32,252 | 16,352 | |||||
Depreciation & amortization, net | 459,779 | 324,968 | |||||
EBITDA | (2,251,051 | ) | (666,360 | ) | |||
Stock-based compensation | 174,711 | 254,718 | |||||
Unrealized (gain) loss on marketable securities | 18,749 | (37,497 | ) | ||||
Gain on termination of unfavorable contract liability | — | (71,375 | ) | ||||
Adjusted EBITDA | $ | (2,057,591 | ) | $ | (520,514 | ) |
(1) Non-GAAP Financial Measures
In addition to reporting net income, a
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Consolidated net loss | $ | (2,694,479 | ) | $ | (967,905 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 459,779 | 324,968 | |||||
Stock-based compensation | 174,711 | 254,718 | |||||
Provision (release) for doubtful accounts | 44,000 | (183,955 | ) | ||||
Gain on disposition of assets | (19,950 | ) | (41,931 | ) | |||
Unrealized (gain) loss on investment securities | 18,749 | (37,497 | ) | ||||
Gain on termination of unfavorable contract liability | — | (71,375 | ) | ||||
Changes in operating assets and liabilities | |||||||
(Increase) decrease in: | |||||||
Accounts receivable | (1,324,448 | ) | 67,940 | ||||
Employee retention credit receivable | 667,121 | 562,752 | |||||
Unbilled revenue | 56,994 | 1,302,187 | |||||
Inventories | (165,537 | ) | (947,031 | ) | |||
Prepaid assets and other current assets | (19,128 | ) | 70,806 | ||||
Other assets | 491,836 | 466,420 | |||||
Increase (decrease) in: | |||||||
Accounts payable | 1,140,759 | (182,903 | ) | ||||
Accrued expenses and other current liabilities | 256,847 | (80,720 | ) | ||||
Deferred revenue | 458,512 | (487,676 | ) | ||||
Other liabilities | (566,016 | ) | (482,608 | ) | |||
Net cash used in operating activities | (1,020,250 | ) | (433,810 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (31,728 | ) | (286,820 | ) | |||
Payment for business acquisition | (170,000 | ) | — | ||||
Purchases of intangible assets | — | (29,505 | ) | ||||
Proceeds from disposition of assets | 16,863 | 72,655 | |||||
Distributions to non-controlling interest | (62,693 | ) | (56,823 | ) | |||
Net cash used in investing activities | (247,558 | ) | (300,493 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net cash provided by financing activities | — | — | |||||
Change in cash and cash equivalents | (1,267,808 | ) | (734,303 | ) | |||
Cash and cash equivalents, beginning of the period | 1,913,969 | 3,614,463 | |||||
Cash and cash equivalents, end of the period | $ | 646,161 | $ | 2,880,160 | |||
Supplemental disclosures of cash flows information: | |||||||
Cash paid for interest | $ | 7,385 | $ | 14,597 | |||
Cash paid for taxes | $ | 32,252 | $ | 16,352 | |||
Non-cash consideration issued for Aegis acquisition: | |||||||
Accounts receivable credit | $ | 300,000 | $ | — | |||
Accounts payable assumed | 91,048 | — | |||||
Contingent consideration | 1,442,462 | — | |||||
Total fair value of non-cash consideration | $ | 1,833,510 | $ | — |
Source:
2023 GlobeNewswire, Inc., source